AMC Networks Inc. Reports Full Year and Fourth Quarter 2012 Results

AMC Networks Inc. Reports Full Year and Fourth Quarter 2012 Results

Full Year 2012 Highlights:

  *Net revenues increased 13.9% to $1.353 billion
  *Operating income increased 11.1% to $363 million
  *AOCF^1 increased 5.4% to $465 million

NEW YORK, Feb. 26, 2013 (GLOBE NEWSWIRE) -- AMC Networks Inc. ("AMC Networks"
or the "Company") (Nasdaq:AMCX) today reported financial results for the full
year and fourth quarter ended December 31, 2012.

President and Chief Executive Officer Josh Sapan said: "2012 was a successful
year for AMC Networks. Our continued strategy of investing in original
programming while developing strong brands with consumers resulted in record
ratings, most notably for AMC's ratings juggernaut 'The Walking Dead.' We
resolved our legal dispute with DISH Network, completed new carriage
agreements with a number of leading distributors, and expanded our
relationships with key advertisers. All of which, contributed to strong
financial results for the full year and gives us confidence that we are
well-positioned for continued success in the year ahead."

Fourth Quarter Results

Fourth quarter net revenues increased $28 million, or 8.2%, to $367 million
over the fourth quarter of 2011, led by 10.8% growth at National Networks
which more than offset a decline of $7 million at International and Other.
Adjusted Operating Cash Flow ("AOCF")^1 totaled $103 million, a decrease of
4.0% or $4 million versus the prior year period. As discussed in the "Other
Matters" section of this release, AOCF reflected the impact of the litigation
and associated temporary carriage termination with DISH Network. National
Networks AOCF increased 5.6% and International and Other AOCF declined $11
million versus the prior year period. Operating income was $81 million, an
increase of 2.0% or $2 million versus the prior year period. The operating
income increase resulted from 15.5% growth at National Networks partially
offset by a $12 million decrease in operating income at International and
Other.

Fourth quarter net income from continuing operations was $15 million ($0.21
per diluted share), compared with $29 million ($0.40 per diluted share) in the
fourth quarter of 2011. The decrease resulted from costs related to the
repayment of the term loan B facility partially offset by growth in operating
income.

Full Year Results

Full year 2012 net revenues increased $165 million, or 13.9%, to $1.353
billion over full year 2011, reflecting 15.9% growth at National Networks
partially offset by a decrease of 8.8% at International and Other. AOCF
totaled $465 million, an increase of 5.4% or $24 million versus the prior year
period. AOCF reflected the impact of the litigation and associated temporary
carriage termination with DISH Network. The AOCF increase resulted from 10.0%
growth at National Networks partially offset by a decrease of $25 million at
International and Other. Operating income was $363 million, an increase of
11.1% or $36 million versus the prior year period. The operating income
increase resulted from 16.8% growth at National Networks partially offset by
an increase of $27 million in operating loss at International and Other.

^1. See definition of Adjusted Operating Cash Flow ("AOCF") included in the
discussion of non-GAAP financial measures on page 5 of this earnings release.

Full year 2012 net income from continuing operations was $136 million ($1.89
per diluted share), compared with $126 million ($1.79 per diluted share) in
full year 2011. The increase resulted from the growth in operating income
partially offset by an increase in interest expense.

For the full year 2012, net cash provided by operating activities was $569
million and Free Cash Flow^2 was $551 million.These amounts include a
preliminary disbursement of $350 million related to the VOOM HD lawsuit
settlement. As discussed in the "Other Matters" section of this release, the
$350 million disbursement is subject to the final resolution of the allocation
of the proceeds from the VOOM HD lawsuit settlement.Excluding the $350
million related to the VOOM HD lawsuit settlement, net cash provided by
operating activities was $219 million and Free Cash Flow was $201 million for
the full year 2012.These amounts represent a decrease of $36 million and $39
million, respectively, compared to the full year 2011.Excluding the $350
million related to the VOOM HD lawsuit settlement, the $39 million decrease in
free cash flow was primarily the result of an increase in cash interest, cash
income taxes and capital expenditures partially offset by improved operating
performance.

Segment Results                                                         
(dollars in   Three Months Ended      Twelve Months Ended December
thousands)    December 31,            31,
             2012    2011    Change  2012      2011      Change
                                                    
Net revenues:                                        
National      $       $       10.8%   $         $         15.9%
Networks      338,551 305,438         1,254,186 1,082,358
International 32,619  39,246  (16.9%) 114,541   125,573   (8.8%)
and Other
Inter-segment (4,458) (5,725) 22.1%   (16,150)  (20,190)  20.0%
eliminations
Total net     $       $       8.2%    $         $         13.9%
revenues      366,712 338,959         1,352,577 1,187,741
                                                    
AOCF:                                                
National      $       $       5.6%    $ 492,129 $ 447,555 10.0%
Networks      106,694 101,079
International (4,302) 6,907   n/m    (30,040)  (4,976)   (503.7%)
and Other
Inter-segment 522     (814)    n/m   3,328     (866)      n/m
eliminations
Total AOCF    $       $       (4.0%)  $ 465,417 $ 441,713 5.4%
              102,914 107,172

National Networks

National Networks consists of the Company's four nationally distributed
programming networks, AMC, WE tv, IFC and Sundance Channel.

Fourth Quarter Results

National Networks revenues for the fourth quarter 2012 increased 10.8% to $339
million, AOCF rose 5.6% to $107 million, and operating income grew 15.5% to
$89 million, all compared to the prior year period.

Fourth quarter growth in revenues was led by a 16.0% increase in advertising
revenues to $157 million.The increase in advertising revenues was due to
strong demand for our original programming, primarily at AMC. Distribution
and other revenues increased 6.8% to $182 million.The increase in
distribution and other revenues was attributable to growth in affiliate fees
partially offset by a decline in digital distribution revenues.

^2.See definition of Free Cash Flow included in the discussion of non-GAAP
financial measures on page 5 of this earnings release.

Fourth quarter AOCF increased 5.6% to $107 million reflecting the increase in
revenues offset by an increase in operating expenses.The increase in
operating expenses was primarily attributable to higher programming and
marketing expenses compared to the prior year period.As previously noted,
AOCF was negatively impacted by the DISH Network temporary carriage
termination.The operating income increase reflected the growth in AOCF and a
reduction in amortization expense.

Full Year Results

National Networks revenues for the full year 2012 increased 15.9% to $1.254
billion, AOCF rose 10.0% to $492 million, and operating income grew 16.8% to
$408 million, all compared to the prior year period.

Full year growth in revenues was led by a 16.9% increase in advertising
revenues to $523 million.The increase in advertising revenues was led by
AMC.Distribution and other revenues increased 15.2% to $731 million.The
increase in distribution and other revenues was attributable to growth in
digital and licensing distribution revenues as well as increases in affiliate
fees.

Full year AOCF increased 10.0% to $492 million reflecting the increase in
revenues offset by an increase in operating expenses.The increase in
operating expenses was primarily attributable to higher programming and
marketing expenses compared to the prior year period.As previously noted,
AOCF was negatively impacted by the DISH Network temporary carriage
termination.The operating income increase reflected the growth in AOCF and a
reduction in amortization expense.

International and Other

International and Other primarily consists of AMC/Sundance Channel Global, the
Company's international programming business; IFC Films, the Company's
independent film distribution business; AMC Networks Broadcasting &
Technology, the Company's network technical services business; and VOOM HD.

Fourth Quarter Results

International and Other revenues for the fourth quarter of 2012 declined $7
million to $33 million, AOCF declined $11 million to a deficit of $4 million,
and operating income decreased $12 million to a loss of $9 million, all
compared to the prior year period.

Fourth quarter revenues reflected an increase in affiliate fee revenues
related to the Company's international operations which was more than offset
by a decline in revenues at IFC Films and Broadcasting & Technology.

The decline in fourth quarter AOCF primarily reflected the decrease in
revenues and an increase in litigation expenses related to VOOM HD.Operating
loss results reflected the decline in AOCF as well as an increase in
depreciation expense.

Full Year Results

International and Other revenues for the full year 2012 declined $11 million
to $115 million, AOCF declined $25 million to a deficit of $30 million, and
operating loss increased $27 million to $49 million, all compared to the prior
year period.

Full year revenues reflected an increase in affiliate fee revenues related to
the Company's international operations which was more than offset by a decline
in revenues at IFC Films and Broadcasting & Technology.

The decline in full year 2012 AOCF primarily reflected the decrease in
revenues and an increase in litigation expenses related to VOOM HD.Operating
loss results reflected the decline in AOCF as well as an increase in
depreciation expense.

Other Matters

DISH Network

As previously disclosed, on May 20, 2012, DISH Network, LLC ("DISH Network")
terminated carriage of Sundance Channel and on July 1, 2012 DISH Network
terminated carriage of AMC, IFC, and WE tv.We believe the termination was
directly related to litigation between DISH Network and VOOM HD.On October
21, 2012, DISH Network and the Company entered into a settlement agreement
resolving the litigation.Simultaneously with the execution of the settlement
agreement, DISH Network entered into a long-term affiliation agreement with
the Company that provided for the resumption of carriage of AMC, IFC, Sundance
Channel and WE tv by no later than November 1, 2012.The temporary carriage
termination had a material impact to AOCF and operating income for the three
months and twelve months ended December 31, 2012.

Based on the Company's fair value assessment of the affiliation agreement, the
affiliate fees payable by DISH Network to the Company from the effective date
of the affiliation agreement of October 21, 2012 through December 31, 2013 are
below fair value by approximately $31 million and the affiliate fees payable
by DISH Network over the remaining terms of the affiliation agreement
represent fair value.As a result, the Company recorded the $31 million excess
of the fair value of the affiliation agreement over the contractual
affiliation fees as deferred revenue on October 21, 2012, of which
approximately $5 million was recognized as revenue during 2012 as the
programming services were provided.The remaining $26 million is included in
deferred revenue in the December 31, 2012 consolidated balance sheet and will
be recognized ratably over 2013 as the programming services are provided.

In connection with the VOOM HD settlement agreement, DISH Network paid $700
million to an account for the benefit of Cablevision Systems Corporation
("Cablevision") and the Company.Pending a determination of the allocation of
the settlement proceeds, $350 million of the cash proceeds was distributed to
each of Cablevision and the Company.Accordingly, the portion disbursed to the
Company is included in cash and cash equivalents in the consolidated balance
sheet at December 31, 2012.The final amount to be allocated to the Company is
yet to be determined and may be significantly less than $350 million.

Please see the Company's Form 10-K for the period ended December 31, 2012 for
further details.

Debt

On December 17, 2012, the Company issued $600 million in aggregate principal
amount of 4.75% senior notes due December 2022.The Company used the proceeds
of this offering to repay its term loan B facility.In connection with this
repayment, the Company recorded a write-off of $12 million principally related
to a loss on the extinguishment of the debt.Additionally, the company
recorded an unrealized loss of $9 million on the related interest swap
contracts, which is included in interest expense.

As previously disclosed, the Company voluntarily prepaid $150 million of the
outstanding balance of the Term A Credit Facility during the full year
2012.The total prepaid amount consists of three $50 million payments made on
March 8, 2012, July 9, 2012 and November 7, 2012.

Description of Non-GAAP Measures

The Company defines Adjusted Operating Cash Flow ("AOCF"), which is a non-GAAP
financial measure, as operating income (loss) before depreciation and
amortization, share-based compensation expense or benefit and restructuring
expenses or credits. Because it is based upon operating income (loss), AOCF
also excludes interest expense (including cash interest expense) and other
non-operating income and expense items. The Company believes that the
exclusion of share-based compensation expense or benefit allows investors to
better track the performance of the various operating units of the business
without regard to the effect of the settlement of an obligation that is not
expected to be made in cash.

The Company believes that AOCF is an appropriate measure for evaluating the
operating performance of the business segments and the Company on a
consolidated basis. AOCF and similar measures with similar titles are common
performance measures used by investors, analysts and peers to compare
performance in the industry.

Internally, the Company uses net revenues and AOCF measures as the most
important indicators of its business performance, and evaluates management's
effectiveness with specific reference to these indicators. AOCF should be
viewed as a supplement to and not a substitute for operating income (loss),
net income (loss), and other measures of performance presented in accordance
with U.S. generally accepted accounting principles ("GAAP"). Since AOCF is not
a measure of performance calculated in accordance with GAAP, this measure may
not be comparable to similar measures with similar titles used by other
companies. For a reconciliation of AOCF to operating income (loss), please see
page 8 of this release.

The Company defines Free Cash Flow from Continuing Operations, ("Free Cash
Flow"), which is a non-GAAP financial measure, as net cash provided by
operating activities (continuing operations) less capital expenditures
(continuing operations), both of which are reported in our Consolidated
Statement of Cash Flows. Net cash provided by operating activities excludes
net cash provided by operating activities of discontinued operations. The
Company believes the most comparable GAAP financial measure of its liquidity
is net cash provided by operating activities. The Company believes that Free
Cash Flow is useful as an indicator of its overall liquidity, as the amount of
Free Cash Flow generated in any period is representative of cash that is
available for debt repayment, investment, and other discretionary and
non-discretionary cash uses. The Company also believes that Free Cash Flow is
one of several benchmarks used by analysts and investors who follow the
industry for comparison of its liquidity with other companies in the industry,
although the Company's measure of Free Cash Flow may not be directly
comparable to similar measures reported by other companies. For a
reconciliation of Free Cash Flow to net cash provided by operating activities,
please see page 9 of this release.

Forward-Looking Statements

This earnings release may contain statements that constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are based on management's current expectations and
are subject to uncertainty and changes in circumstances. Investors are
cautioned that any such forward-looking statements are not guarantees of
future performance or results and involve risks and uncertainties, and that
actual results or developments may differ materially from those in the
forward-looking statements as a result of various factors, including financial
community and rating agency perceptions of the Company and its business,
operations, financial condition and the industries in which it operates and
the factors described in the Company's filings with the Securities and
Exchange Commission, including the sections entitled "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained therein. The Company disclaims any obligation to update
any forward-looking statements contained herein.

Conference Call Information

AMC Networks will host a conference call today at 10:00 a.m. ET to discuss its
full year and fourth quarter 2012 results.To listen to the call, visit
http://www.amcnetworks.com or dial 1-877-347-9170, using the following
passcode: 91468440.

About AMC Networks Inc.

AMC Networks owns and operates several of cable television's most recognized
brands delivering high quality content to audiences and a valuable platform to
distributors and advertisers.The Company manages its business through two
reportable operating segments: (i) National Networks, which includes AMC, WE
tv, IFC and Sundance Channel; and (ii) International and Other, which includes
AMC/Sundance Channel Global, our international programming business; IFC
Films, the Company's independent film distribution business; and AMC Networks
Broadcasting & Technology, the Company's network technical services business.
For more information on AMC Networks, please visit the Company's website at
http://www.amcnetworks.com.

AMC NETWORKS INC.
CONSOLIDATED STATEMENTS OF INCOME
Three and Twelve Months Ended December 31, 2012 and 2011
(In thousands, except per share amounts)
(Unaudited)
                                                               
                                  Three Months Ended  Twelve Months Ended
                                   December 31,        December 31,
                                  2012      2011      2012        2011
                                                               
Revenues, net                     $ 366,712 $ 338,959 $ 1,352,577 $ 1,187,741
                                                               
Operating expenses:                                             
Technical and operating (excluding 158,530   143,247   507,436     425,961
depreciation and amortization)
Selling, general and               109,624   91,942    396,926     335,656
administrative
Restructuring credit              --        --        (3)         (240)
Depreciation and amortization     17,894    24,651    85,380      99,848
                                  286,048   259,840   989,739     861,225
                                                               
Operating income                  80,664    79,119    362,838     326,516
                                                               
Other income (expense):                                         
Interest expense                  (38,588)  (30,378)  (127,778)   (95,870)
Interest income                   195       136       502         1,074
Write-off of deferred financing    (1,216)   (544)     (1,862)     (6,274)
costs
Loss on extinguishment of debt    (10,774)  (191)     (10,774)    (14,726)
Miscellaneous, net                (21)      (17)      (652)       (137)
                                  (50,404)  (30,994)  (140,564)   (115,906)
                                                               
Income from continuing operations  30,260    48,125    222,274     210,610
before incometaxes
Income tax expense                (15,069)  (18,860)  (86,058)    (84,248)
Income from continuing operations 15,191    29,265    136,216     126,362
Income from discontinued           --        213       314         92
operations, net of income taxes
Net income                        $ 15,191  $ 29,478  $ 136,530   $ 126,454
                                                               
Basic net income per share:                                     
Income from continuing operations $ 0.22    $ 0.42    $ 1.94      $ 1.82
                                                               
Income from discontinued           $ 0.00    $ 0.00    $ 0.00      $ 0.00
operations
                                                               
Net income                        $ 0.22    $ 0.42    $ 1.94      $ 1.83
                                                               
Diluted net income per share:                                   
Income from continuing operations $ 0.21    $ 0.40    $ 1.89      $ 1.79
                                                               
Income from discontinued           $ 0.00    $ 0.00    $ 0.00      $ 0.00
operations
                                                               
Net income                        $ 0.21    $ 0.41    $ 1.89      $ 1.79
                                                               
Weighted average common shares:                                 
Basic weighted average common      70,636    69,521    70,374      69,283
shares
                                                               
Diluted weighted average common    72,347    72,281    72,236      70,731
shares


AMC NETWORKS INC.
SUPPLEMENTAL FINANCIAL DATA
(Dollars in thousands)
(Unaudited)
                                                               
                 Three Months Ended December 31, 2012
                            Depreciation Share-Based                Operating
                           and          Compensation Restructuring Income
                  AOCF      Amortization Expense      Credit        (Loss)
                                                               
National Networks $ 106,694 $ (14,155)   $ (3,465)    $--          $ 89,074
International and (4,302)   (3,739)      (891)        --           (8,932)
Other
Inter-segment     522       --          --          --            522
eliminations
Total            $ 102,914 $ (17,894)   $ (4,356)    $--          $ 80,664
                                                               
                 Three Months Ended December 31, 2011
                            Depreciation Share-Based                Operating
                           and          Compensation Restructuring Income
                  AOCF      Amortization Expense      Credit        (Loss)
                                                               
National Networks $ 101,079 $ (21,196)   $ (2,744)    $--         $ 77,139
International and 6,907     (3,455)      (658)        --           2,794
Other
Inter-segment     (814)     --          --          --            (814)
eliminations
Total            $ 107,172 $ (24,651)   $ (3,402)    $--          $ 79,119
                                                               
                 Twelve Months Ended December 31, 2012
                            Depreciation Share-Based                Operating
                           and          Compensation Restructuring Income
                  AOCF      Amortization Expense      Credit        (Loss)
                                                               
National Networks $ 492,129 $ (70,436)   $ (13,576)   $--          $ 408,117
International and (30,040)  (14,944)     (3,626)      3             (48,607)
Other
Inter-segment     3,328     --          --          --            3,328
eliminations
Total            $ 465,417 $ (85,380)   $ (17,202)   $ 3           $ 362,838
                                                               
                 Twelve Months Ended December 31, 2011
                            Depreciation Share-Based                Operating
                           and          Compensation Restructuring Income
                  AOCF      Amortization Expense      Credit        (Loss)
                                                               
National Networks $ 447,555 $ (85,701)   $ (12,582)   $--          $ 349,272
International and (4,976)   (14,147)     (3,007)      240           (21,890)
Other
Inter-segment     (866)     --          --          --            (866)
eliminations
Total            $ 441,713 $ (99,848)   $ (15,589)   $ 240         $ 326,516


AMC NETWORKS INC.
SUPPLEMENTAL FINANCIAL DATA
(In thousands)
(Unaudited)
                                                         
                           December 31,    September 30,   December 31,
                            2012            2012            2011
                                                         
National Networks                                         
Subscribers
AMC ^(a)                    98,900          84,300          96,300
WE tv ^(a)                  81,500          66,600          76,100
IFC ^(a)                    69,600          55,200          65,300
Sundance Channel ^(b)       50,200          40,600          42,100
                                                         
(a) Estimated U.S. subscribers as measured by Nielsen Media Research.      
(b) Subscriber counts are based on internal management reports and        
represent viewing subscribers.

Capitalization                                        December 31,
                                                      2012
                                                     
Cash and cash equivalents ^(a)                        $ 610,970
Less: preliminary VOOM HD lawsuit settlement          (350,049)
disbursement
Cash and cash equivalents excluding preliminary VOOM  $ 260,921
HD lawsuit settlement disbursement
Credit facility debt ^(b)                             $ 880,000
Senior notes ^(b)                                     1,300,000
Total debt                                           $ 2,180,000
                                                     
Net debt                                             $ 1,919,079
                                                     
Capital leases                                       15,662
Net debt and capital leases                          $ 1,934,741
                                                     
LTM AOCF ^(c)                                         $ 465,417
                                                     
Leverage ratio ^(d)                                   4.2 x
                                                     
(a) Includes $350,049 related to the preliminary VOOM HD lawsuit settlement
disbursement (see the "Other Matters" section of this release for further
details).
(b) Represents the aggregate principal amount of the debt.                  
(c) Represents reported AOCF for the trailing twelve months.                
(d) Represents net debt (excluding the $350,049 related to the preliminary
VOOM HD lawsuit settlement disbursement) and capital leases divided by LTM
AOCF.This ratio differs from the calculation contained in the Company's
credit facilities.

                                             
Free Cash Flow                                Twelve Months Ended December 31,
                                             2012             2011
Net cash provided by operating activities    $ 569,132        $ 255,233
Less: preliminary VOOM HD lawsuit settlement  (350,049)        --
disbursement
Net cash provided by operating activities
excluding the preliminary VOOM HD lawsuit     $ 219,083       $ 255,233
settlement disbursement
Less: capital expenditures                   (18,557)         (15,371)
Free cash flow excluding the preliminary VOOM $ 200,526        $ 239,862
HD lawsuit settlement disbursement

CONTACT: Investor Relations
         Seth Zaslow (646) 273-3766
         szaslow@amcnetworks.com
        
         Corporate Communications
         Georgia Juvelis (917) 542-6390
         gjuvelis@amcnetworks.com
 
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